G.R. No. 221216 , July 13, 2020
Land Bank of the Philippines, Petitioner, vs. Heirs of Barrameda, Respondents.

FACTS

Leoncio Barrameda owned a 6.1415-hectare land in Camarines Sur. Upon his death, his heirs succeeded to the property. A 5.7602-hectare portion was placed under the coverage of Presidential Decree (P.D.) No. 27 and distributed to farmer-beneficiaries, with corresponding emancipation patents and tax declarations issued in their names. On September 20, 2000, the heirs filed a complaint for determination and payment of just compensation against the Department of Agrarian Reform (DAR) and the Land Bank of the Philippines (LBP), alleging the farmer-beneficiaries had been in possession since 1972 and no compensation had been paid. The Regional Trial Court sitting as a Special Agrarian Court (RTC-SAC) upheld LBP’s valuation of P653,818.99, computed using factors updated as of June 30, 2009 under DAR Administrative Order No. 1, Series of 2010 (A.O. No. 01-10). However, the RTC-SAC found LBP guilty of delay and imposed 12% interest per annum on the compensation, reckoned from January 1998 (when tax declarations were issued to the beneficiaries). LBP moved for partial reconsideration, arguing the interest was already included in the valuation pegged to 2009 values. The RTC-SAC denied the motion. LBP appealed to the Court of Appeals (CA). On November 19, 2013, LBP deposited the compensation amount. The CA affirmed the RTC-SAC with modification, ruling that the 12% interest should be reckoned from the actual time of taking, which it deemed to be the issuance of the emancipation patents, and remanded the case to the RTC-SAC to receive evidence on the actual issuance date. LBP’s motion for reconsideration was denied.

ISSUE

1. Whether interest on the just compensation due to LBP’s delay should be reckoned from the issuance of the emancipation patents (allegedly April 16, 1990) or from June 30, 2009 (the date used for valuation under A.O. No. 01-10).
2. Whether the applicable interest rate is 12% or 6% per annum.

RULING

The petition is partly meritorious. The Court ruled that just compensation must be fair, reasonable, and paid without delay. Interest compensates for the delay in payment when property is taken without immediate compensation. For properties covered by P.D. No. 27 where the claim folders were received by LBP before July 1, 2009, the applicable formula for valuation is under the rules prior to Republic Act No. 9700 , specifically DAR Administrative Order No. 13, Series of 1994 (A.O. No. 13-94) and its amendments. A.O. No. 13-94 incorporates a 6% yearly interest compounded annually from the date of taking until full payment, which is deemed included in the valuation. Therefore, imposing an additional 12% interest would constitute a double imposition. The Court found that the RTC-SAC and CA erred in imposing 12% interest. The correct interest is the 6% per annum already factored into the valuation under the applicable administrative orders. The date of taking is the issuance of the emancipation patents. The case was remanded to the RTC-SAC to: (a) receive evidence on the actual date of issuance of the emancipation patents to determine the reckoning point for the 6% interest; (b) compute the just compensation using the formula under A.O. No. 13-94, as amended, incorporating the 6% interest from the date of taking; and (c) deduct the amount already deposited by LBP from the total computed compensation.